Indonesian SMEs Part III: Views from the ground

• SMEs do not have technical ability to ‘go digital’
• Aware of huge market potential, they want training

 

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THE call for small and medium enterprises (SMEs) in Indonesia to ‘go digital’ is not new, but there has been a lack of awareness and education.
 
SMEs have heard the call, but don’t necessarily understand what it actually means, going by what some owners told Digital News Asia (DNA).
 
For some, it merely means using social media to sell their products. “I automatically associate ‘going digital’ with selling via social media networks like Instagram or Facebook,” said Noor Anugrahandina (pic above), owner of Roro Kenes Indonesia, which specialises in handmade leather bags.
 
These bags are targeted at women from the middle-class and above, and range in price from Rp1.7 million to Rp3.9 million (approximately US$124-US$285) a piece.
 
Speaking to DNA at last month’s Trade Expo Indonesia 2015 in Jakarta, Noor said the only social media network she uses is Instagram, to display her products.
 
“Actually, I have a website, but it has no content except for an e-catalogue which is rarely updated,” said Noor, who founded the business in April 2014.
 
“If I think about the time I would need to spend on it, and also the workers I would have to hire to properly manage my website – especially to respond to requests and questions from potential buyers – well, my partners and I cannot afford this at the moment,” she added.
 
Noor said she is aware of the business benefits of adopting technology and getting online, and that an attractive, fully-functional and well-managed digital presence would open a bigger market.
 
However, just like many other SME owners, Noor believes that going digital would be complicated, time-consuming, and more importantly, would require special expertise.
 
“We do not quite understand what is required to go digital – after we build a website, what next? How do we make it interactive, and how much is it going to cost to manage it?” she said.
 
For Noor, as with many such SME owners, managing the business is time-consuming enough, without needing to add a digital dimension.
 
“It is a big responsibility. Once our products are displayed on websites or we go into e-commerce, the demand will certainly increase – but would we be ready to meet this increase in demand?” she said.

 

Currently, at full clip with its 10 workers, her company Roro Kenes can only produce 100 bags per month.
 
Being physical seems to be a better bet than going digital. Noor said she appreciates efforts by the Indonesian Government, as well as various ministries and associations, in organising SME exhibitions such as Trade Expo Indonesia.
 
“I try to participate in one event every month to promote and sell our bags,” she said, adding that while participating in exhibitions also takes its toll in terms of time and effort, the business returns are there.
 
“If there is assistance and training available for SMEs to go digital, where we are taught how to manage and utilise technology for our business in an efficient way, I will obviously participate. I want my business to thrive too,” she said.
 
No weeping gently for these guitars

 

Unlike Roro Kenes, BatikGuitar was digital from its inception, to better reach customers, said its owner Guruh Sabdo Nugroho (pic above).
 
Having a digital presence gives the maker of handmade batik-painted guitars an edge, he told DNA.
 
“From the start, I knew it would be difficult to compete in the market if I only used conventional distribution channels such as shops – which are usually filled with the popular guitar brands anyway,” he said.
 
Guruh first started selling his guitars in 2011 via Facebook. The response was good enough, but he later also promoted his guitars on the Kaskus Internet forum, considered Indonesia’s largest online community.
 
In 2013, he decided to hire an expert to develop a website, which has now become the main portal for his business.
 
“To sell a product in a digital way, you need a story or narrative – and the story I sell is that you have unique guitar, specially crafted in a completely handmade process,” he said.
 
BatikGuitar’s instruments sell for US$800-US$4,000 each, or about Rp10 million to Rp55 million, depending on the amount of work and the quality of the raw materials.
 
In one month, Guruh can only make 10 to 15 guitars, both electric and acoustic. He crafts the guitars himself, assisted by five workers at his workshop in Solo, Central Java.
 
The BatikGitar website contains complete and updated product information – which is however displayed merely as an e-catalogue, and does not cater to direct bookings or electronic purchases.

Still, even in this relatively limited fashion, the benefits of ‘going digital’ has seen great returns, especially with his buyers who mostly come from outside Indonesia, according to Guruh.
 
“The advantage of selling a unique product like mine online is grabbing buyers from other countries – 70% of my buyers come from overseas, mainly from Australia, the Netherlands, and Russia,” he said.
 
But despite the advantages of going digital, Guruh is reluctant to increase his online presence. As with Noor, he worries about increased demand.
 
In Guruh’s case, it is difficult to find talented and reliable people capable of crafting handmade, batik-painted guitars – which is also why he can only receive a limited number of orders each month.
 
“If our website was opened for direct orders, I am afraid I would not be able to meet all the orders due to our limited production capacity,” he said.
 
When it comes to increasing calls for SMEs to adopt technology, Guruh said the main challenges are not only access to technology, but also production capacity and human resources.
 
“If we have more skillful human resources, we could increase our production and then we could go fully digital – production capacity, human resources and technology are all closely linked,” he said.
 
When it comes to Indonesian SMEs being asked to go digital, as usual with technology issues, it is not only about technology.
 
Previous Instalments:
 
Driving the economy
 
Lack of data, coordination and will
 
 
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E-commerce: Gaps in both buyer and seller side
 
 
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